The Economics of eHealth

One of a series of discussion papers published by the mHealth Alliance

 The Economics of eHealth
Julian Schweitzer

Christina Synowiec

Results for Development Institute

INTRODUCTION

The value of research

Information and communication technologies (ICTs) are potentially powerful instruments to strengthen
health systems, with innovations ranging from electronic health records to transmission of clinical data.
These technologies show great promise in low- and middle-income countries (LMICs) whose health
systems face severe financial, infrastructural, technical and human resource constraints. This is evident
in the growing number of health service providers beginning to focus on mobile technologies to improve
access and quality of health services1.

At the same time, there is a growing debate about whether the touted potential of ICT benefits and
savings can be actualized on a large scale, both in OECD countries and LMICs2. Over a decade of efforts
to implement ICTs in healthcare demonstrate notable successes, but also costly failures2. Furthermore,
despite a growing global interest in e- and mHealth, relatively little is known about the economics of
eHealth. In fact, a recent paper notes that the failure to demonstrate the value of eHealth is one of the
principal challenges to achieving widespread adoption of high-performing ICT initiatives2. However, the
lack of hard evidence to support eHealth investments should be seen in the context of a rapidly
developing field; other major economic sectors have embraced modern IT to improve productivity and
effectiveness, and it is likely that the health sector can also share in many of these benefits. There is,
however, a real need for economic analysis that can guide public and private investment decisions.

Given the increasing number of mHealth trials and level of interest in e- and mHealth, this is an
opportune time to review the available data on the costs and benefits of e- and mHealth and suggest a
roadmap for future research. This paper is intended to provide an outline of key economic and financial
questions to pursue in the development of scenarios for in-country eHealth policy and strategy
investments.

1
This paper reviews the economics of eHealth (of which mHealth is a part), though as a practical matter mHealth
has the potential to predominate in LMICs due to the growing ubiquity of wireless, the relative absence of wired
infrastructure, and the importance of delivering care to people with limited access to clinics and skilled health
workers.
2
OECD. “Improving Health Sector Efficiency: The Role of Information and Communication Technologies.” Paris:
OECD, 2010.

2
The term mHealth is defined in this paper as the provision of health-related services using mobile
telecommunication and multimedia technologies3, 4. Mobile technology, general e-infrastructure, and
eHealth infrastructure are interrelated entities, with mobile technologies serving as a key access
technology in LMICs. Within ICTs, portable technology through the use of mobile devices (mHealth) is by
far the fastest growing segment¹. Examples of mobile devices commonly utilized in healthcare today
include (but are not limited to):

Mobile phones and smart phones

Laptop computers and netbooks
Global Positioning System (GPS) devices
Mobile telemedicine/telecare devices
Mobile patient monitoring devices

This paper focuses on technologies that are likely to have high potential to enhance healthcare delivery
in LMICs. These include technologies that increase patient access to health services and information,
and improve the way health professionals deliver health services. In most cases, mHealth exists as an
extension and augmentation of existing IT-based health capability (eHealth), however limited that may
be. Indeed, it is this combination that is likely to produce the greatest systemic benefits, though there
are emerging solutions in the areas of patient access to information (e.g. peer-to-peer forums on the
web), and in supply chain efficiencies (preventing counterfeiting, stock-outs), that are not dependent on
the national healthcare systems, public and private.

The promise of e and mHealth in LMICs

The potential of mHealth and eHealth for resource-constrained environments becomes obvious when
considering the following facts. 1) The global eHealth market is estimated at $96 billion and growing,
with many innovations coming from LMICs5, 6. 2) 70% of all mobile phone users are in emerging markets,
which are also the fastest growing markets7, 8. 3) Almost 90% of the world’s population lives in areas
with mobile phone coverage, providing a technology platform for mHealth applications7, 9. 4) By 2012,

3
Istepanian, R. and J. Lacal (2003). “Emerging Mobile Communication Technologies for Health: Some Imperative
notes on m-Health.” Paper presented at the 25th International Conference of the IEEE Engineering in Medicine and
Biology Society, Cancun,Mexico.
4
Mechael, Patricia N. “The Case for mHealth in Developing Countries.” Innovations. Cambridge, MA: MIT Press,
2009.
5
Boston Consulting Group. Understanding the eHealth market. Presented at “Making the eHealth Connection:
Global Partners, Local Solutions”. Bellagio, Italy: 2008.
6
Gerber, Ticia, Veronica Olazabal, Karl Brown, and Ariel Pablos-Mendez. “An Agenda for Action on Global E-
Health.” Health Affairs 29:2 (2010): 235-238.
7
International Telecommunications Union Statistics, 2010.
8
Lambert, Olivier and Elizabeth Littlefield. “Dial Growth.” Finance & Development 46:3 (2009).
9
Vital Wave Consulting. “mHealth in the Global South: Landscape Analysis.” Washington, D.C.: United Nations
Foundation and Vodafone Foundation, 2008.

3
half of all individuals in remote areas of the world will have mobile phones10. 5) Smartphones
constituted 14% of all handset sales in 2009, were by far the fastest growing segment (up 24%), and are
predicted to reach parity with global feature phone sales by 2012, enabling a slew of more advanced
mHealth applications. The rapidly increasing ubiquity, capability and innovation of mobile technologies
stands in stark contrast to those of more conventional health technologies and health infrastructures in
many LMICs, demonstrating the potential of mobile technologies to help a rapid scale up and
improvement of health services to underserved populations.

The health care sector in many LMICs is constrained by the high financial and human resource costs, as
well as lengthy implementation times, of expanding health facilities and training workforces based on
accepted WHO standards. A recent report from UNICEF11 argues for an equity-based approach to child
survival as the most practical and cost-effective way of meeting the health Millennium Goals, and it is
likely that mHealth will be a key tool in the arsenal of policies and programs to reach poor and under-
served populations. Many policymakers are therefore exploring the extent to which ICT, especially
mobile technologies, can augment or substitute existing health care models by focusing on distributed
primary care and centralized administration. This approach leverages the limited ICT administrative
capacity of the healthcare system, while extending health knowledge directly to villages and community
health workers, using mobile solutions that include data collection, remote diagnostics, treatment
checklists, decision support, and patient reminders.

More than 100 countries are now exploring the use of mobile phones to achieve better health. In
Ghana, for instance, nurse midwives use mobile phones to discuss complex cases with their colleagues
and supervisors. In India, mDhil12 sends text messages giving information about various rarely discussed
health topics and supporting prevention and patient self-management efforts. Rwanda uses a system of
rapid SMS alerts, through which community health workers inform health centers about emergency
obstetric and infant cases, enabling the centers to offer advice or call for an ambulance if needed13.

mHealth and eHealth have the potential to overcome many traditional obstacles to the delivery of
health services to the poor in LMICs, especially those of access, quality, time, and resources4. In
particular, one obstacle many LMICs face in the delivery of health services is the shortage of health
workers and poor distribution of existing providers. At present, 57 countries face critical shortages of
health workers, with estimates ranging from a global deficit of 2.4 million to over 4 million doctors,
nurses, and midwives14, 15. These problems are exacerbated by deficiencies in the skills, training, and

10
Vital Wave Consulting. “mHealth for Development: The Opportunity of Mobile Technology for Healthcare in the
Developing World.” Washington, D.C.: United Nations Foundation and Vodafone Foundation, 2009.
11
UNICEF. “Narrowing the Gaps to Meet the Goals.” New York: UNICEF, 2010.
http://www.unicef.org/media/files/Narrowing_the_Gaps_to_Meet_the_Goals_090310_2a.pdf.
12
mDhil is an mHealth product that provides basic healthcare information to the Indian consumer via text
messaging, mobile web browser, and interactive digital content. See http://www.mdhil.com/aboutus
13
UN, Global Strategy for Women and Children’s Health, 2010.
14
World Health Organization. The World Health Report 2006: Working Together for Health. Geneva: WHO, 2006.

4
distribution of the existing workforce, with the majority of highly skilled health workers located in urban
centers10.

Low-cost mobile technologies can overcome some of these barriers through the remote delivery of
health services and information, thus leveraging existing health service delivery platforms. Low-cost
mobile technologies can also play an important role in enhancing the effectiveness of health workers,
while giving rural and periurban populations access to health resources where skilled health workers
and conventional infrastructure are limited. For example, the government of Rwanda recently
announced a $32m eHealth plan to coordinate and promote the use of technology to support
healthcare delivery nationwide, with the ultimate goal of leveraging ICT mechanisms, including mobile
technologies, to achieve universal health coverage16.

Perhaps nowhere is there greater potential for mHealth than in accelerating progress towards the
Maternal and Child Millennium Development Goals (MDGs)17. Poor women and children often have very
low access to quality health services due to poverty, lack of physical access to health facilities, poorly
trained health providers, and cultural factors that limit health care accessibility18. Many countries are
successfully employing community health workers to provide a first line service to these neglected
groups. e- and mHealth have the potential to enhance these services by providing first-line providers
with information, low-cost and easy-to-use diagnostic and decision support tools, and access to remote
diagnostic centers, while giving systems administrators real time, actionable information on their staff,
supply chains, and emerging patterns. In summary, the e- and mHealth combination has the potential to
increase progress toward global health goals, ranging from improved disease-specific outcomes such as
HIV/AIDS and malaria, to strengthened health systems.

The economic evidence-base for e- and mHealth

Although there is a growing recognition of the potential benefits of e- and mHealth, the literature shows
little research to date into the economic impact of such investments in LMICs. First, while many papers
note the potential benefits of eHealth9, 10, 3, 4, few take this beyond speculation, by measuring outcomes
directly linked to e- and mHealth solutions. Second, much of the literature takes a micro-view of the
field, restricted to a case-specific evaluation of existing technologies10, 19, 20. Third, as further discussed in
the section “LMIC-specific cost analysis”, the limited range of studies on the economics of eHealth is

15
World Health Organization and Global Health Workforce Alliance. The Kampala Declaration and Agenda for
Global Action. Geneva: WHO, 2008.
16
The New Times. “$32M Health Initiative Unveiled.” www.newtimes.co.rw/pdf.php?issue=14315&article=19469.
1 September 2009.
17
MDG 4: Reduce child mortality; MDG 5: Improve maternal health.
18
World Health Organization. Countdown to 2015: Tracking Progress in Maternal, Newborn and Child Survival. The
2008 Report. Geneva: WHO, 2008.
19
World Bank. eCapacity Enhancement Project for the Health Sector in Sri Lanka. Geneva: World Bank, 2005.
20
eHealth Case Studies. http://www.ehealth-impact.org/case_studies/index_en.htm.

5
mainly confined to OECD countries21, 22, 23, with perhaps rather limited relevance for the very different
problems that LMICs face (including the continuing brain drain of ICT and healthcare workers to the
developed world).

With this in mind, this paper aims to encourage further discussion and research around the economics
of eHealth in LMICs. Some important questions for consideration include: 1) the costs of eHealth
infrastructure; 2) regulatory structures which provide incentives at different levels of the health delivery
system to encourage investment in, and use of, eHealth; and 3) measuring the outcomes of successful
eHealth utilization, including anticipated return on investment (ROI). The need is not just to add up the
costs of ICTs, but to compare the costs of a distributed approach to the current health service delivery
cost structure. It should also be noted that eHealth and mHealth deployments to date have almost
invariably been one-off solutions for specific problems, rather than standardized, integrated systems
connecting and sharing information along the full continuum of care. A siloed approach can result in 1)
interoperability concerns, and 2) the inability to promote scale. And finally, it is important to evaluate
how eHealth is applied, as that will also determine its effectiveness.

In recognition that eHealth is already a rapidly progressing field, answers to these questions can help
identify: 1) how to best leverage these technologies at lowest cost, and 2) how to prioritize initiatives
based on need, availability of resources, and anticipated outcomes. Toward this aim, we have divided
the paper into two main sections focused on the costs and benefits of eHealth. Each section will
highlight specific questions for further research, setting the roadmap for ongoing research and analysis.
Within each question, we review the available literature, propose promising areas of inquiry, and offer
methods to generate economic models for planning and analysis.

21
OECD. Improving Health Sector Efficiency: The Role of Information and Communication Technologies. Paris:
OECD, 2010.
22
RAND Europe and Capgemini Consulting. Business Models for eHealth. Cambridge, United Kingdom: European
Commission, 2009.
23
Dobrev, Alexander, Tom Jones, Karl Stroetmann, Yvonne Vatter, and Kai Peng. Study on the Economic Impact of
Interoperable Electronic Health Records and ePrescription in Europe. Germany: European Commission, 2009.

6
AN EXAMINATION OF EHEALTH COSTS

LMIC-specific cost analysis

The literature on the cost of ICTs in health is largely limited to OECD countries, with a focus on the role
of information and communication technologies in improving health sector efficiency, deriving value
from eHealth systems, and assessing the economic impact of eHealth investments. mHealth is not the
explicit focus of the research. Furthermore, while this analysis is useful as a starting point, it may not be
entirely relevant for LMICs. First, most OECD countries are heavily urbanized, with generally universal
access to healthcare. Much of the investment has therefore gone into health management information
systems and hospital administration, rather than the use of mHealth to increase access for underserved
populations. Second, the level of training of health workers, the public-private mix of healthcare
financing and providers, the health and IT regulatory systems, and the capacity of the public sector to
introduce new technologies may be very different in poorer countries.

It is therefore important that separate studies are carried out in LMICs. These broad-based studies need
to focus on LMIC-specific issues, including 1) the introduction of mobile technologies in remote, rural
areas; and 2) the training of community health workers to use mHealth technologies. Outlined below
are potential approaches to assessing e- and mHealth costs, including an examination of the impact of
mHealth on overall healthcare costs, the drivers of cost within mHealth itself, and incentive structures to
drive down costs of mHealth. This can include cost-effectiveness, cost-benefit, and cost-utility analyses
as economic evaluations. Regardless of approach, it is important to maintain an LMIC-specific lens
within each approach in order to address the deficit of research on mHealth costs within LMICs.

Impact of eHealth on health costs

Historically, in rich countries, technological innovation has tended to drive healthcare costs upwards24.
Overall costs rise as new, expensive products are diffused to increasingly broader segments of the
patient population. It has proved difficult to control demand, even if the efficacy of the new product is
not yet well demonstrated. For example, within the United States there are many market incentives for
consumers to overuse new products, in turn driving overall costs up. Information technology may also
fail to decrease the costs of health administration. Contrary to the overall experience of business and
government enterprises outside of health, where ICT has increased productivity, a recent HIMSS survey
showed that while U.S. hospitals have increased their use of IT, there was no indication that it lowered
costs or streamlined administration25.

It is a reasonable hypothesis, however, that the introduction of low-cost mobile technologies has the
potential to reverse this trend, at least as far as delivering health services to poor, underserved

24
Beever, Charles and Melanie Karbe. The Cost of Medical Technologies: Maximizing the Value of Innovation.
McLean, Virginia: Booz Allen Hamilton, 2003.
25
Healthcare IT News. “Health IT savings estimates are ‘wishful thinking,’ say Harvard researchers.”

7
populations in both rural and urban areas. The cost of mobile phones, other hand-held devices, and
computers has declined dramatically over the last decade even as capabilities have increased. Similarly,
mobile bandwidth capacity is increasing as costs decline26. Remote collection and transmission of
diagnostic data by community health workers to centers with a critical mass of computer programs,
skilled technicians and doctors (and computers) to interpret the data should be more cost-effective than
often unsuccessful efforts to train and deploy an adequately skilled workforce in rural areas (and
develop the requisite rural infrastructure). eHealth can provide transformative alternatives to increase
the productivity of healthcare. However, since e- and mHealth are still in their relative infancy in LMICs,
there is little concrete data and research to test hypotheses of this kind.

Potential methods for evaluating such trends include:

Analysis of relevant technology cost trends outside of healthcare. This would allow for the
extrapolation of trends in general ICT costs to potential cost shifts in health ICTs. While there is
little direct evidence on the impact of ICTs on the cost of healthcare in LMICs, it is well
established that ICT unit costs are declining rapidly. For example, according to U.S. Bureau of
Labor Statistics consumer price data for computer equipment and mobile phones27, the price of
computers has dropped drastically, with a 20% annual decrease from 1999 to 2003 and an 11-
12% annual decline for the last three years. The evaluation of non-healthcare technology costs
over time is appealing as an immediate proxy for the lack of readily available data on eHealth-
specific costs globally.
Analysis of cost of increased consumption of health services as a result of mHealth. mHealth is
largely intended to provide increased health access to people that are typically excluded or hard
to reach. Studies of mHealth’s impact on total health expenditures would compare the cost of
this increased use with the cost if the same services had been delivered and consumed in the
traditional manner.
Country-specific case study. As previously noted, available research on costs related to e- and
mHealth are typically restricted to OECD and EU countries21, 22, 23, and may have limited value for
policymakers in LMICs (although providing a useful starting point in study design, monitoring,
and evaluation). Further, most trials of mHealth in LMICs are of single source solutions. To
better understand cost trends in LMICs, it will be necessary to carry out a series of case studies
in countries with a diverse range of development and health challenges. Potential countries for
research include India, China, Nigeria, Ghana, Rwanda, and South Africa. These studies need to
be broad and deep enough to reflect a complete system or subsystem, such as maternal care
within a district. This will allow the full range of costs and benefits to be addressed.

26
To put this in context, in rural India, mobile phone coverage is 25 per 100 population, with higher costs in rural
than in urban areas due to power shortages. Only 50m people, largely in urban areas, have broadband access and
there are serious capacity constraints (evidence provided to author). However, scale up is likely to be rapid.
27
U.S. Bureau of Labor Statistics: Consumer Price Index. http://www.bls.gov/cpi/

8
 Segmentation of the eHealth LMIC market. Understanding segmentation of the consumer
market is important in understanding product and service functionality, and the potential
impact on prices. eHealth has yet to be subjected to this discipline as it is still in its early stages
of development and largely driven by government grants and research donations. The
Rockefeller Foundation-funded Center for Health Market Innovations database28, housed by
Results for Development Institute, may reveal useful information that can help identify the level
of adoption of mobile technologies by market demographics. For example, it appears from
studies by the Development Fund of the Global Systems for Mobile Communications Association
(GSMA) that 24x7 health information call centers are a valued and profitable service in a
number of LMIC countries29. This information can help organizations developing mobile devices
to focus on the subset of the population most likely to adopt the technology, based on need,
interest, and rate of return. It can also help organizations identify differences in product
considerations when defining market segments.

Drivers of cost within eHealth

In order for eHealth to fulfill its potential, the likely drivers of cost within the eHealth infrastructure
should be assessed and, in turn, successful methods to contain costs identified. Such analysis first
requires the identification and assessment of the individual drivers of cost within e- and mHealth, as
outlined below. In recognition that an assessment of cost drivers should not be the sole focus of a
financial analysis of eHealth, the cost drivers outlined below serve as a starting point for future research.

Potential methods for evaluating key cost drivers include:

Production process

Upfront investment in planning the eHealth infrastructure. This can stand as a fixed or variable
cost, but is an inherent part of eHealth infrastructure development. This can include the human
resources, technology development, and initial training costs, as well as the costs of developing
metrics to measure eHealth performance over time.
Assessment of integrated, interoperable systems (platforms) vs. a one-off approach. ICTs have
proliferated globally because standardization and competition have driven down costs and
addressed consumer needs very effectively. Thus far, eHealth and mHealth investments have
often been the opposite: primarily one-off projects to solve specific problems. A more efficient
approach is to seek to replicate the scope and scale of the global wireless industry through the
standardization of the architecture and interfaces of underlying hardware and software. This will
allow the technology to be interoperable and support the full continuum of care through the
sharing of platforms and common utilities. While there are certainly country differences in

28
Center for Health Market Innovations. http://healthmarketinnovations.org
29
Ivatury, Gautam, Jesse Moore, and Alison Bloch. A Doctor in Your Pocket: Health Hotlines in Developing
Countries. London: GSMA Development Fund, 2009.

9
 policy, content and infrastructure development, there are many similarities that can be
leveraged to promote scale and reduce costs. Another example of deployment efficiency is the
ability to host mHealth applications in large, secure data centers; this can help mitigate the need
for IT infrastructure and expertise at the local level. It can also promote the sharing and
implementation of best practices more quickly (due to fewer nodes to upgrade).
eHealth’s impact on human resources. The impact of ICTs on the deployment of health workers,
such as physicians, is critical to evaluate in determining overall costs. While distributed care
obviously cannot always substitute for actual practitioner-to-patient care (for example, if
surgery is required), it can enhance the quality of diagnostic and treatment services and greatly
increase patient access, especially to initial primary care. For example, a telemedicine link
between a specialist located in an urban setting and a patient in a rural setting promotes access,
but may not change the cost structure. However, a distributed health system where functions
currently designed to be performed by doctors or nurses in a clinic setting are transferred to less
expensive health workers in the field (or to computers), enabled and monitored with ICT, saving
only the critical cases for the doctors to review, may significantly impact the cost structure.
Cost savings as a result of the existing wireless market infrastructure. A key issue for mHealth is
the cost and capabilities of wireless hardware and services. These are generally already shared
with non-health services, resulting in cost savings. Furthermore, private entities have developed
such infrastructures with private investment, taking advantage of global economies of scale.
There is a clear upward trend in capabilities (as evidenced by the introduction of higher capacity
networks and smart phones), and a clear downward trend in costs of handsets and service. The
latter is still relatively high in a number of developing markets. The primary determinant of cost
of telecommunications to healthcare users will be some combination of competition in the
overall market and any special arrangements made for health, either by a carrier for marketing
reasons, or arrangements with the government.
Assessment of the cost-impact of sharing services between mHealth and other mServices. The
growing ubiquity of mobile technologies is resulting in the development of mServices, such as
mobile banking, with an increasing emphasis on location-based services enabled by GPS. The
cross-impacts of mPayments and mInsurance with mHealth is particularly interesting, with the
potential to leverage common identification and registry databases. Given the overlap between
mHealth and mServices, it would be useful to analyze the cost saving opportunities of shared
devices, services and information platforms (e.g. shared promotion and education costs to the
same users, common support and billing, etc.)
An examination of the relationship between cost and mass production. Increased unit demand
leads to volume production that pushes down unit costs in electronics. The GSMA led an
initiative to reduce the cost of mobile handsets, by aggregating demand from a number of
developing countries, and then developing a handset contract with an assured volume of 40
million phones30. If the forces of the global market can be brought to bear on mHealth, similar

30
GSMA Embedded Mobile initiative. See www.gsmworld.com/our-work

10
 economies of scale are likely to prove true for mHealth technologies, and, potentially, mHealth
services. Increased demand for mHealth technologies (resulting in part from the benefits of
standardization) would allow vendors to reduce prices and increase market share and size. For
example, a developer of a wireless ultrasound product currently prices an individual unit at
US$5,000. However, the price would drop below US$1,000 per unit if there were a market for
100,000 units31. Standardization has other benefits. The mobile industry recently agreed to
move to a universal power supply design, which, in addition to cost benefits, means any phone
can use any charger. Further investigation, including discussions with technology manufacturers
and suppliers will help determine whether such economies of scale in mHealth devices are likely
to be the norm, or whether a market intervention is needed to aggregate demand (incentive
structures for economies of scale are discussed below).
Impact of competition on product cost. Competition has the potential to increase efficiencies
and drive down costs amongst competing vendors. As such, it is important to survey the
landscape of existing and potential competition for the specific eHealth product, in addition to
opportunities for partnerships and economies of scale.

Public-private partnerships

Cost-impact of public-private partnerships (country case study). It is most likely that eHealth and
mHealth will be offered in LMICs by a combination of public and private entities, with potential
implications for costs. For example, wireless carriers may choose to host applications or services
for free or reduced costs in order to stimulate overall wireless demand. Given that a number of
these partnerships are already in development in countries like Brazil32 and South Africa33, they
provide a real-time opportunity to collect and assess data on the cost impact of such
relationships10. However, they are currently limited in scope. As the health value chain and the
parallel economic value chain for integrated systems along the continuum of care are developed
and understood, parties can develop sustainable partnerships where public and private interests
are both served. In essence, how can each sector best direct the financial, technical, and
operational responsibilities of developing an mHealth infrastructure in a cost-effective fashion?
This is a critical area for public and private leaders to advance, creating examples that can be
studied.
Case studies on end-to-end service along the continuum of care. Recent reports have highlighted
the need for dynamic public-private partnerships to help achieve MDGS 4 and 510, 34, 35, 36. Trials

31
Anecdotal evidence provided to authors.
32
Nokia Data Gathering system through a partnership between Nokia and the Amazonas State Health Ministry.
33
The Dokoza System through a partnership between Dokoza, State Information Technology Agency, Centre for
Public Service Innovation, Centre for Scientific and Industrial Research and the Meraka Institute, South Africa’s
National Department of Health.
34
Khan, M. Adil. Achieving the Millennium Development Goals: The Public/Private Mix. UN-DESA.
35
Feezel, Charlie and Virginia Sopyla. Achieving Millennium Development Goals through Public-Private
Partnerships. Boston: Harvard University.

11
 of end-to-end systems to test the public-private model will provide opportunities to evaluate
the impact of public-private partnerships on costs. One example is the recently announced
Maternal mHealth Initiative37. One of its goals is to develop country trials of integrated ICT
systems in maternal and child health through public-private partnerships.
Impact of donors on eHealth costs. A key to driving down costs is standardization. Currently,
donors are funding a wide range of individual, but siloed e- and mHealth initiatives; this
approach may inadvertently hinder interoperability and standardization. Agreement between
donors, LMIC policymakers and industry on architecture, standards and best practices should
speed deployment, improve interoperability and drive down costs (as has been experienced in
the computer and wireless industries over the last 25 years.)
The role of the public sector. It is reasonable to assume that the private sector and civil society
will continue to be important drivers of mHealth adoption, with many of the newest mobile
technologies emerging from medical device and mobile technology companies. The public
sector in LMICs will play an important role as purchaser and regulator, providing incentives or
disincentives to increase uptake of mHealth and to reduce cost. It is likely that the overall
healthcare and telecommunications regulatory structures will heavily influence the costs and
speed of scale-up of mHealth. An analysis of the regulatory environment will therefore be
necessary in determining the investment case for eHealth and mHealth. It would need to include
the following: competition and price regulation; authorization of telecommunication/ICT
services; universal access and service; radio spectrum management; legal and institutional
framework; new technologies and impact on regulation38. Other factors, such as the relatively
higher costs of provision of mobile phone access in rural areas needs to be considered39.

As an example of the influence of regulatory systems, the global wireless explosion is generally credited
to the decision by most countries (a) to license several wireless competitors, not just the incumbent
wireline monopoly, and (b) to not regulate prices or services. In countries that have liberalized their
infrastructure markets, some wholesale networks have emerged through the impact of market forces. In
other countries, mobile operators are required by law to use the incumbent’s network for backbone
services, which may drive up the cost and/or reduce options for IT users40. Ethiopia still has a monopoly
service provider so its wireless coverage lags far behind most other countries. This serves as a valuable
case study of the downstream costs (and savings) for getting regulation correct.

In summary, it will be important to carry out case studies of different country regulatory systems to
determine the healthcare and telecommunications regulatory structures that provide the best
opportunities for low cost eHealth provision.

36
Taskforce on Innovative Financing for Health Systems, 2009.
37
See www.mHealthAlliance.org
38
World Bank, infoDev and International Telecommunications Union, ICT Regulation Toolkit, 2010.
39
For example, mobile operators may need to provide back-up power generators in areas with unreliable power
supplies, thus increasing operating costs.
40
Broadband for Africa, Developing Backbone Communications Networks, Williams D, World Bank 2010.

12
Potential questions for consideration include:41

What are the reforms (e.g. in regulatory and licensing systems) needed to incentivize
investment in, and utilization of, e- and mHealth services and devices?
What incentives can the public sector put in place to drive down costs?
What are the incentives for the public sector to support the development of a standards-based
system, perhaps including a baseline information system platform?

41
Potential countries for evaluation against these questions include South Africa, Bangladesh, India and Brazil.

13
AN EXAMINATION OF EHEALTH BENEFITS

Analysis of downstream savings from investments in standardized mHealth

platforms
Interoperability, defined as the ability to exchange and use information from another system or device,
has proved to be challenging to implement. As systems move to machine-to-machine mode, simple
connectivity is no longer adequate42. Furthermore, the addition of mobile communication devices adds
completely new communication systems and rules. Interoperability is key to the scaling up of mobile
health services in LMIC markets, and to ensuring end user convenience and flexibility in the utilization of
mHealth devices and programs.

As such, it is important to build a basic health information platform to coordinate, guide, and support
resultant individual mHealth initiatives. This will ensure interoperability among individual mobile
technologies at the data communications layer, while addressing the challenge of scaling up mHealth
programs. Furthermore, upfront investment has the potential to yield downstream savings, as individual
mHealth devices will have the capacity from the outset to interface, share data, and leapfrog off one
another’s services. Through the development of a framework architecture, one can then create specific
web, software, or mobile services for large-scale deployment in alignment with the existing architecture.

Potential methods for evaluating such trends include:

Case study of an end-to-end, integrated system, such as the Maternal mHealth Initiative of
PMNCH, the mHealth Alliance and other organizations. The initiative presents an opportunity to
develop, measure, and analyze data on downstream savings as a result of the development of a
standardized information system platform. This would also take an area-specific case study
approach, focused on the use of a common information systems platform and offer the
opportunity to evaluate the impacts of such a platform on costs.
Analysis of downstream savings from investments in information technology platforms outside
of healthcare. In particular, the development of the mobile phone infrastructure provides
opportunities to study the benefits of the use of standards. The single GSM wireless standard
used by most of the world and the global market buying and deploying it have been major
drivers of innovation and cost reductions.

Determining the benefits of mHealth

As previously noted, there is little research on the benefits accruing from eHealth. Measuring the value-
added of eHealth to global health outputs and outcomes will require cost-effectiveness analysis of such
investments. Such analysis will help determine the objective value of eHealth investments, as compared

42
Waegemann, C. Peter. “mHealth: The Next Generation of Telemedicine?” Telemedicine and e-Health 16.1
(Jan/Feb 2010) : 23-25. Print.

14
with other investments that can improve patient health. Furthermore, it is important to recognize that
while eHealth may not decrease overall costs (even if unit costs decline, overall costs may rise as usage
increases), it can still result in decreased unit costs for delivering specific services. And it can result in
increased benefits, such as improved patient access to quality healthcare and patient satisfaction.

Measurement of mHealth costs and benefits can therefore help generate the data necessary to target
and attract investments in mobile technologies, and prioritize these investments in the face of
competing demands and resource constraints; in essence, developing an infrastructure that enables,
first, greater health outcomes, and second, potentially lower costs. The measures described below push
beyond commonly cited health outcomes, such as morbidity and mortality, and explore other metrics
for evaluating program success.

Potential methods for evaluating such trends include:

Analysis of potential areas for cost savings and increased efficiency. In evaluating the value of
eHealth, it is essential to take into consideration the potential benefits to the overall health
system, as captured below. The table outlines eHealth’s opportunities for reducing costs and
increasing efficiency as related to the patient and administration, and helps hone in on benefits
that fall outside of outcomes tied to quality of care (eHealth’s potential benefit to quality of care
is discussed below). Further analysis should also take into consideration the extent of
transformational change to business operations. Implementers must think through the layers of
potential savings and efficiency gains, outlined in the table below, weighed against the level of
change required for workflow and operations.

Health Systems: Examples of Potential Areas for Saving Costs and Increasing Efficiency
Patient Issues
Patient registration
Creation of persistent record
Payment for services
Remote diagnostics
Referrals
Scheduling follow-ups
Opportunities for Reducing Costs and Increasing Efficiency
One-time registration
Information available on subsequent visits
Serves multiple purposes (e.g. vital statistics registries in
addition to care)
Improved speed and efficiency of care delivered
Information base developed for wide variety of direct care
and administrative uses
Data is entered once
Streamlined automatic billing, payment system
Documentation of billing, payment actions
Reduction of clinic visits
Saves time for patient
Improved patient triage
More efficient use of time of skilled health workers
Efficient access to closest available resources
Automatic messaging to public and providers

15
Disease surveillance Enables real-time surveillance, resource allocation
Public information More targeted distribution of information
24x7 call centers Decreased need for in-person clinic visits
Administration Issues
Performance review Easier and more timely aggregation of data by factors
including district, region, provider, and disease
Staff communications Voice and data communications increase efficiency
Staff management Ability to mine data to monitor staff performance through
various filters, including at the individual or aggregate level
Ability to supervise staff in real-time
Staff training Combination of physical and eTraining may provide
efficiencies over traditional model, particularly for “just-in-
time” training
Payments Operations and record keeping efficiency
Fraud protection
Supply chain management Avoiding stockouts
Fraud protection, e.g. fake medicines
Research Development of data marts that can be leveraged for
research
Reduce repetitive and costly primary research and data
collection efforts.

Cost-effectiveness analysis of eHealth technology investments. An evaluation of the benefits of

eHealth programs should focus on clinical and social outcomes using reliable conversion
factors43. The outcomes are focused on benefits to the patient and the provider, the two targets
of eHealth technologies as discussed in the section on “The promise of eHealth.” It is important,
however, to translate the metrics to the end user of the specific technology. For example, smart
phones could be used to help train community health workers in aspects of maternal and child
health and the metrics should frame specified outcomes for mothers, newborns, and children
resulting from the training. Further research should focus on the ability of eHealth to improve
health systems outcomes as well, including but not limited to efficiency gains and strengthened
service programs. The table below, derived from Dávalos et al43, may serve as a starting point
for measuring the value of clinical and social outcomes resulting from mHealth.

Representative Monetary Conversion Factors for mHealth Outcomes

Client/Patient Perspective
Outcome Measure Unit Monetary Conversion Factor

43
Dávalos, María E., Michael T. French, Anne E. Burdick, and Scott C. Simmons. “Economic Evaluation of
Telemedicine: Review of the Literature and Research Guidelines for Benefit-Cost Analysis.” Telemedicine and e-
Health 15.10 (2009) : 933-949. Print.

16
Medical Effectiveness
Reduced morbidity44 Change in quality-adjusted life- Value of a statistical life-year from
years (QALYs) the value of a statistical life
Avoided mortality44 Avoided years of life lost Value of a statistical life-year from
the value of a statistical life
Healthcare services and others
Increased access to healthcare Indirect effect: Change in QALYs Value of a statistical life-year from
the value of a statistical life
Increased health knowledge/ Indirect effect: Change in QALYs Value of a statistical life-year from
ability for self-care the value of a statistical life
Faster/accurate diagnosis and Indirect effect: Change in QALYs Value of a statistical life-year from
treatment the value of a statistical life
Reduced waiting and/or Missed hours/days of Average of minimum context-
consultation time employment, classroom or leisure specific wage rate (hourly or daily)
time
Increased adherence to medical Indirect effect: Change in QALYs Value of a statistical life-year from
regimen the value of a statistical life
Occupation
Continuity of income Missed hours/ days of Average of minimum context-
employment avoided specific wage rate (hourly or daily)
Increased employment/ Missed days or hours of classroom Average or minimum context-
leisure/classroom time time or work absences avoided; specific wage rate (hourly or daily)
increased available leisure time
Travel
Money spent on travel: Distance Mileage allowance rate or airfare
transportation cost to nearest referral facility
Money spent on travel: Average cost for accommodations 1.00
accommodation in referral location
Money spent on travel: other Money spent on local 1.00
expenses transportation and meals

Provider Perspective
Outcome Measure Unit Monetary Conversion Factor
Healthcare services and others
Reduced length of stay at Days Context-specific charges per
medical facility inpatient day in facility
Avoided medical readmissions Count Context-specific charges per
inpatient day in facility multiplied
by the average duration of
readmissions
Avoided inpatient visits Count Context-specific charges per
inpatient day in facility multiplied
by the average duration of

44
Potential opportunity to highlight outcomes specific to maternal, newborn, and child health.

17
 inpatient visits
Avoided laboratory tests Count Average context-specific charges
per emergency room visit
Avoided patient’s transportation Count Average context-specific charges
to healthcare facilities per laboratory test
Reduced length of consultations Minutes or hours Average context-specific physician
or specialists’ fee (hourly)
Other outcomes
Increased medication adherence Indirect effect: avoided use of Average context-specific charges
healthcare utilization: number of for specific healthcare services
inpatient visits, referrals, etc.
Increased knowledge transfer Avoided referrals from knowledge Average context-specific specialist
among practitioners transfer or hours/ days of training fee (patient avoided costs should
required to obtain same be included as well or cost per day
knowledge plus work time lost (in of training plus work loss at
hours or days) for training average context-specific
physician’s hourly or daily fee)
Increased accuracy and faster Indirect effect: avoided use of Average context-specific charges
diagnosis and treatment healthcare utilization: number of for specific healthcare services
inpatient visits, referrals, etc.
Increased patient satisfaction .. 1.00 (willingness to pay for
mHealth program)
Decreased travel and/or home visits for staff
Increased employment time Days or hours Average context-specific wage
(productivity) rate for nurses, physicians or
other specialists (hourly or daily)
Money spent on travel: Distance in kilometers or miles Cost to travel
transportation
Money spent on travel: Average cost for overnight stay 1.00
accommodation

Other Stakeholders Perspective

Outcome Measure
Healthcare services and others
Increased productivity of
workers (less travel, less illness)
More efficient access to health
for special groups (informal
sector, etc.): transportation
costs, staff costs
Avoided cases of communicable
diseases
Unit
Avoided missed days/hours of
employment time
Distance to referral facility and
days/hours of work for staff
Cases
Monetary Conversion Factor
Average or minimum context-
specific wage rate (hourly or daily)
Mileage allowance rate for
transportation and average daily
or hourly wage rate for staff
Average medical costs (health
resources utilization and staff) per
case, average avoided loss of
wages and productivity from
illness per case

18
 Cost-benefit comparison of mHealth technologies and alternative methods of health service
delivery. One of the key questions in determining cost is the standard against which to compare
the value. There is now widespread agreement on the interventions, including health worker
training and health systems infrastructure needed to reach the MDGs and these interventions
have been costed36. Building on the metrics to measure mHealth benefits, as outlined above,
further research could investigate mHealth outcomes as compared to traditional service delivery
methods. For example, what is the difference in timeliness of treatment for a patient utilizing an
mHealth device vs. a patient traveling in person to a medical facility? What is the difference in
levels of patient satisfaction? This approach would not only provide a baseline point of
comparison for program benefits and patient satisfaction, but also explore the potential for
cost-minimization as a result of mHealth technologies. Additionally, it would highlight areas in
which mHealth may not provide cost-effective outcomes for health access and service delivery,
thus providing the factors which determine when mHealth is best leveraged.
Maternal, newborn, and child health (MNCH)-specific outcomes analysis. Mobile technologies
are recognized to have much to offer in improving MNCH, with significant efforts under way
now through the mHealth Alliance and other public-private partnerships to harness their
potential. In the utilization of mHealth programs with the MDGs, however, it is important to
direct efforts towards areas of greatest need. Fig 1 below identifies the gaps in the coverage of
procedures within the continuum of care related to maternal, newborn, and child health, which
if met, would significantly impact on the MDGs45. Future mHealth initiatives addressing MDGS 4
and 5 should target mHealth technology investments to these areas of greatest need. For
example, could mHealth investments be used to improve coverage of post-natal visits within
two days, by developing an SMS reminder service for pending appointments?

Fig 1. Coverage estimates for interventions across the continuum of care in the 68 priority
countries (2000-2006).

45
Source: Countdown to 2015: Tracking Progress in Maternal, Newborn and Child Survival. The 2008 report.

19
20
A PRACTICAL APPLICATION

eHealth and Maternal and Child Health

This paper proposes two basic lines of enquiry into the economics of eHealth: 1) an examination of the
drivers of eHealth costs, and 2) an analysis of the benefits – to patients and health workers – which can
accrue from the introduction of eHealth systems. The paper sets out a basic roadmap for investigation
which can support sound investment decisions for eHealth in LMICs. The central premise of this paper is
that systemic investments in m- and eHealth can rapidly expand cost-effective quality health care
distribution to under-served groups – this is essential if the global community is to reach the MDGs. An
end-to-end systems approach is necessary to avoid costly and potentially mutually incompatible one-off
solutions.

In developing a policy and research program to test this premise, it is essential to avoid one of the
central problems identified in the literature review: individual studies of independent components.
These are unlikely to provide the kind of information which policy makers will need to make large-scale
investment decisions. As such, the proposed next step would be to identify a diverse group of three to
four leading LMICs in the eHealth arena which could provide the platform for this research, to help
guide policymaker decisions on eHealth investments. Within those countries, the proposal would be to
create large scale trials of integrated systems (i.e. supporting the full continuum of care in an area, such
as maternal care), as opposed to point solutions. These would be designed to produce answers to the
key financial issues which policymakers face. The areas outlined suggest a framework for further
research that can be applied through case studies in a variety of settings and for a range of audiences.
Further, given the critical importance of women and children’s health, the research should be focused in
this area.

The previously cited 2010 UNICEF study Narrowing the Gaps to Meet the Goals, notes that millions of
lives can be saved by investing first in the most disadvantaged children and communities46. The most
impoverished child populations are faced with the greatest national burdens of disease, ill health, and
illiteracy; as such, focusing on these children with the greatest need can greatly accelerate progress
towards the MDGs and reduce disparities47. Using, for example, the “marginal budgeting for
bottlenecks” (MMB) approach48, eHealth planners and end users can estimate the costs of leveraging
technology to leapfrog existing bottlenecks within healthcare delivery, and more specifically, within
MNCH. eHealth’s greatest promise for LMICs lies in its potential to leapfrog traditional obstacles to
healthcare delivery in resource-constrained areas; and the MBB approach can serve as a starting point

46
UNICEF. “Narrowing the Gaps to Meet the Goals.” New York: UNICEF, 2010.
http://www.unicef.org/media/files/Narrowing_the_Gaps_to_Meet_the_Goals_090310_2a.pdf.
47
UNICEF. “New UNICEF study shows MDGs for children can be reached faster with focus on most disadvantaged.”
www.unicef.com. 7 Sept 2010.
48
A results-based planning and budgeting tool developed by UNICEF, UNFPA and the World Bank that identifies
system-wide supply and demand bottlenecks to adequate and effective coverage of essential health services.

21
for planning and evaluating e- and mHealth investments. The UNICEF research needs to be supported
with a more detailed study of how mHealth and eHealth can help achieve its tactical goals.

Case studies for the application of eHealth to MNCH in systemic innovation trials need to be developed.
In these cases, the investigation of the proposed research areas can help to guide analysis and decision-
making from the outset, and in turn develop a framework for assessing ROI scenarios 5-10 years into the
future.

22
CONCLUSION

Looking forward
With the rapid increase in the number of e- and mHealth projects, several trends indicate the potential
for such technologies to overcome some core health obstacles in LMICs, particularly in resource-
constrained areas. In particular, mHealth has the potential to contribute to the achievement of MDGs 4
and 5, providing mothers and children with increased access to health resources and services. However,
it is essential to consider and quantify the full range of financial costs and benefits through rigorous
economic evaluation. The need is not just to add up the costs of ICTs, but to compare, to the extent
feasible, the costs of a distributed approach enabled by mHealth to the current health service delivery
cost structure. The previously cited “Narrowing the Gap” UNICEF report points the way.

At present, there is little economic evaluation of eHealth, with existing research at too small a scale to
reach generalizable conclusions for investment decisions. For eHealth programs to succeed, public and
private health and IT stakeholders need to develop an investment case to drive scale up and
sustainability of eHealth infrastructures. The economic models and scenarios provided in this paper will
help measure, direct, and evaluate eHealth program performance and better target and attract public
and private investment. Failure to do so could result in missed opportunities to harness the
transformational power of eHealth networks and devices.

This paper focuses on promising areas for research to build such an evidence-base, through real-world
case studies and economic models, and attempts to provide a preliminary framework of questions to
pursue in the evaluation of the economics of eHealth. Although eHealth projects are already operating
in a wide variety of countries around the world, and thus may provide useful data to generate a
platform for informed decision making on investments in eHealth, we are not aware of any that have
been designed as integrated systems (i.e. supporting the full continuum of care in an area, such as
maternal care), as opposed to point solutions. The research and analysis outlined in this paper can help
maximize the value added of future eHealth investments. The next step should be a carefully targeted
research program across a diverse group of low and middle income countries using integrated systems
as the subject.

23
Acknowledgements
The authors acknowledge with thanks support from the mHealth Alliance which funded the preparation
of this paper. We also acknowledge the many helpful suggestions and comments on earlier drafts of the
paper, and in particular the advice from participants at the expert meeting organized by the mHealth
Alliance and World Health Organization in Geneva on September 6th and 7th, 2010.

24
BIOGRAPHIES

Julian Schweitzer
Julian Schweitzer is Principal at the Results for Development Institute (R4D), a nonprofit organization
dedicated to accelerating social and economic progress in low and middle income countries. Prior to
joining R4D, Julian had a distinguished career at the World Bank, with recent positions as Director of the
Health, Nutrition and Population Department and Acting Vice President, Human Development Network.
He has over thirty years of development experience with a focus on human development. He holds a
Ph.D. from the University of London and has authored numerous articles and essays on economic and
human development.

Christina Synowiec
Christina Synowiec is a Program Associate at the Results for Development Institute (R4D), focusing on
health systems development and the promotion of universal health coverage, in addition to mHealth.
Prior to joining R4D, Ms. Synowiec was a Senior Research Analyst at the Advisory Board Company,
where she designed and executed best practice research studies analyzing key economic and political
trends affecting U.S. hospitals. Ms. Synowiec holds a Bachelors of Philosophy in Interdisciplinary Studies
(Magna Cum Laude) specializing in international human rights from Miami University in Oxford, Ohio.

25